Nonprofits are subject to fraud and theft, even more so than for-profit businesses. There are a variety of reasons, but at the core of this tendency are almost always scant controls over cash, too much control invested in one or two people, and a lack of oversight.

The New York Times reported recently on a story that underscores these unfortunately common themes. In this case, cafeteria workers embezzled close to $500,000 in lunch money (yes, lunch money) from middle and high school cafeterias in New Canaan, Connecticut. For those not familiar, New Canaan is a very affluent city on the east coast, pulling much of its population from the wealthy citizens of New York City. The loss of $500,000 is believed to have happened between 2012 and 2017, and was apparently under the radar screen of school officials until very recently. However, the fraud may go back as far as 15 years. The New Canaan police department has now arrested two women – sisters, no less – who are the alleged perpetrators. According to police, the sisters, who were in positions of authority as supervisors, would routinely take cash from the collection drawer that was paid by students for their lunches. As an indicator of the amounts possibly involved, the police noted that after one of the sisters had resigned from her job, the average daily cash intake from one of the schools jumped from about $40 to $150 per day. It was the implementation of some additional financial controls by the school district that finally flushed out the fraud; prior to those controls being put in place, the district was unaware of the problem.

The alleged criminals were patient, stole money over a long period of time, and kept the amounts that they ciphered off at relatively small levels on a daily basis. Not to excuse the school district, but those particular characteristics make it very difficult to spot fraud. Clearly, no checks and balances existed and internal control policies did not exist (or were not enforced). Nonprofits, particularly those that deal in cash, should read this story carefully and then do a little self-reflection. This is not the kind of publicity or stewardship that makes donors happy.